Central banks sold a record amount of US Treasury debt last week while bond funds suffered the biggest ever investor withdrawals as markets shuddered at the prospect of the US Federal Reserve ending its quantitative easing programme.

Holdings of US Treasuries held at the Fed on behalf of official foreign institutions dropped a record $32.4bn to $2.93tn, eclipsing the prior mark of $24bn in August 2007. It was the third week of outflows in the past four.

Should we all worry about the outlook for the mighty American dollar? That is a question that many economists and market traders have pondered as economic pressures have grown. But in recent weeks Virginia’s politicians have been discussing it with renewed zeal. Last month Bob Marshall, a local Republican, submitted a bill to the local assembly calling on the state to study whether it should create its own “metallic-based” currency.

This was not because Virginia is seething with secessionist impulses (dozens of different, local currencies used to circulate in America in the 19th century before the Federal system came into play). Instead, what sparked the bill is fear. “Unprecedented monetary policy actions taken by the Federal Reserve … have raised concern over the risk of dollar debasement,” the bill declares, noting that “foreign threats to the United States in the form of sophisticated cyberattacks have begun to target banks and financial institutions … with the aim of undermining consumer confidence and seriously disrupting the functioning of our nation’s economy.” Hence the need to create a back-up, “trustworthy” monetary unit to “restore confidence and civil order” – just in case disaster strikes in the form of hyperinflation or those Chinese-cum-Iranian cyber geeks.

US Federal Reserve officials fear a backlash from paying billions of dollars to commercial banks when the time comes to raise interest rates.

The growth of the Fed’s balance sheet means it could pay $50bn-$75bn a year in interest on bank reserves at the same time as it makes losses and has to stop sending money to the Treasury.

Officials at the US central bank fear it could create a public-relations nightmare after the Fed was lambasted for rescuing banks during the financial crisis. It is one factor prompting some inside the Fed to reconsider the eventual “exit strategy” from easy monetary policy.

In an interview with the Financial Times, James Bullard, president of the St Louis Fed, said: “If you think of the profitability of the biggest banks, if you’re going to talk about paying them something of the order of $50bn – well that’s more than the entire profits of the largest banks.”

Mr Bullard said that neither interest paid to banks nor possible losses on exit made any difference to the substance of monetary policy.

In a global economy still recovering from the 2008 crisis, boosting economic growth has become a key priority. The discussion among central bankers has focused on using currency depreciation to boost export competitiveness, production and employment.

This is by no means a novel idea. Competitive devaluations were repeatedly used during the 1930s to gain competitive advantage – until the trading partner also devalued, negating the impact of the first devaluation. Such currency wars, or “beggar thy neighbour” policies, prolonged and deepened the Great Depression. More recently, incremental resort to quantitative easing by the US Federal Reserve has weakened the dollar on a trade-weighted basis.

Criminal masterminds and Hollywood scriptwriters have been put on notice. Germany’s central bank is planning to shift 54,000 gold bars worth €27bn from Paris and New York to its base in Frankfurt, one of the biggest publicly announced shipments of the precious metal on record.

Not to make it too easy for anyone planning a series of heists, the Bundesbank declined to say exactly how it would transport the gold, or exactly when.

But between now and 2020, all 374 tonnes of gold bars, each one weighing 12.5kg, stored at the Banque de France will have been moved – probably by truck – to their new home in the vaults below the Bundesbank’s grey 1960s office block in an unfashionable corner of Frankfurt.

Simultaneously, an operation will start to repatriate 300 tonnes of Germany’s 1,500 tonnes of gold on deposit at New York Federal Reserve, this time probably by aeroplane in small batches of 3-5 tonnes in order to be able to insure it, gold traders said.